Shutdown is latest bad news for military towns

Oct. 2, 2013 - 08:36PM
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A statue of 'Iron Mike' in honor of Airborne Troopers is seen Tuesday outside the 82nd Airborne Division War Memorial Museum, in Fayetteville, N.C. A study estimates 37 percent of all business is Fayetteville is military-related, leaving a lot of uncertainty amid budget cuts and the government shutdown. (Jeffrey Collins / AP)

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FAYETTEVILLE, N.C. — In eight years, Brian Kent has taken his military consulting business from the garage of his home to a premier office building with a view of Fayetteville’s most gorgeous park splashed below his corner window. But his eyes Tuesday were glued to the TV on the wall and unfolding coverage of the government shutdown.

In military towns across the U.S., the political battles in the nation’s capital are directly affecting the bottom line as military contractors and other small business brace for the worst — already forced to cope with mandatory budget cuts and promised reductions in the size of the nation’s armed forces.

Now they’re taking another blow, this time from the budget battle in Washington.

“Nobody is making any decisions in Washington for the whole year. This is nothing new. This is just a complete failure for 18 months,” said Kent, whose company revenues have already dropped amid uncertainty over mandatory military budget cuts in 2012. “Our plans for expansion have been on hold for this whole year. If anything, we’re making plans for contraction.”

Kent is hardly alone in Fayetteville. As with large numbers of contractors and business operators in military towns across the United States, business boomed during the wars in Iraq and Afghanistan. And one of the deepest recessions in decades made barely a ripple.

But storm clouds are gathering with planned reductions in the number of military members as the nation slows down its fighting. And the forced budget cuts of sequestration and the unknown effect of the government shutdown are only making people who depend on the military for their living even more nervous.

Kent’s company made more than $10 million at its peak. Revenues have dropped the past two years below that mark. He provides technology support, medical training and medical equipment to the Army, as well as anything else he can give them. But the uncertainty of when he can get paid by the military means his company can’t grow.

He recently told his landlord his business will have to move out of the premium office space he has been renting the past two years. That means Kent will lose his beautiful view of Festival Park, built in 2007 as military spending neared its peak.

Fayetteville’s future is no doubt tied to the nation’s fighting men and women. The Fayetteville Regional Chamber undertook a study in 2011 that found more than 37 percent of the region’s business was related to the military.

“That number is both great and terrible at the same time. Think about Detroit and the auto industry,” said Brandon Plotnick, marketing manager for the Chamber.

People in North Carolina used to call Fayetteville “Fayettenam” because it was once so stark, crime-ridden and ugly. When Kent came here in 1988, he didn’t think he wanted to stay long.

But since the first Gulf War, Fayetteville has embraced the military and that has paid huge dividends.

Fort Bragg is home to four major military commands — the U.S. Army Forces Command; U.S. Army Reserve Command, the 18th Airborne Corps and the U.S. Army Special Operations Command. Their combined reach extends around the globe. And to a large extent, their essential missions will remain open as Congress and the president argue.

Also, many of the base’s Army units have been bolstered in recent years, benefiting from the 2005 base closures that occurred in other regions and ended up shipping units to North Carolina. The base has units commanded by 37 general officers, a concentration topped only by the Pentagon.

“We did not see the recession here,” Plotnick said. “Soldiers kept coming through here, home prices remained stable.”

There were a few signs of the shutdown on its first day. The new 82nd Airborne Division War Memorial Museum was closed and a sign on Bragg Boulevard warned of reduced hours at an auxiliary gate.

Other military towns are also feeling the pinch.

At Fort Stewart in Georgia — the largest Army post east of the Mississippi River — some access gates were closed and many of the post’s 3,100 civilian workers were told to stay home on furlough. Commissaries where military families buy groceries on the sprawling Army post remained open just so they could reduce inventories of perishable foods before closing Wednesday for the duration of the shutdown.

Fort Stewart and its 21,000 soldiers are the lifeblood of neighboring Hinesville, Ga., a military community 40 miles southwest of Savannah. Doing business with an Army post during wartime may have helped some local employers weather the recession in Hinesville. But the last four years have had some serious setbacks.

In 2009, the Army backed out of plans to relocate an additional brigade of roughly 4,000 troops to Fort Stewart, but not until after the city and local businesses had invested $450 million to build new schools, install new utility lines and construct new homes for an influx of soldiers and their families that never happened.

Now Hinesville businesses are hurting.

At Imprint Warehouse, owner Daniel Clark estimates that at one time, 40 cents of every dollar he made came from Army units at Fort Stewart buying decorative coins, T-shirts, ball caps printed with logos of infantry brigades and battalions.

But military budgets have grown so tight this year that Clark has scrambled to find work with a local chemical company and other civilian employers to make up for the loss in orders from Fort Stewart, which he now estimates makes up just 5 percent of his overall business.

“If I would have foreseen the recession, the sequestration and the government not being able to fund itself and keep itself running, then no I probably wouldn’t have started this business,” Clark said Tuesday.

In the coming years, the Pentagon plans to cut 1,400 Fort Stewart soldiers from its rolls. That bad news was soon followed by automatic budget cuts that forced furloughs of 3,100 Fort Stewart civilian workers earlier this year. Hinesville employers worry the latest shutdown will inflict even more damage.

With Fort Stewart still facing a loss of more than 6 percent of its soldiers as the Army deactivates one of its combat brigades in coming years, Clark said he’s not counting on his military customers coming back any time soon.

And the economic blow to the Army is causing civilian customers to be more cautious with their spending as well, said Barbara Meador Finster, vice president over furniture sales for VIP Office Furniture and Supply in Hinesville.

“With Fort Stewart shut down today, even the regular commercial customers who would normally be here aren’t coming because they’re scared,” Finster said. “I don’t know how long this is going to last.”

VIP Office has shrunk from 45 workers about four years ago to just 22 now. Finster said orders for new desks, chairs and file cabinets for Fort Stewart offices have been practically nonexistent this year. And Army units that normally splurge in September to spend what’s left in their budgets at the end of the federal fiscal year mostly kept their wallets closed.

“Normally yesterday would have been our busiest day of the year with the end of the government fiscal year, and it was one of the slowest days we had,” Finster said.

After 23 years with VIP Office, Finster isn’t weathering her first government shutdown. She helped the company plow through the last one during the Clinton administration, when she recalls soldiers dipping into their own paychecks to buy paper and printer cartridges because they had no government money to spend.

Fort Stewart once accounted for about 60 percent of VIP Office’s sales. Now it’s about 30 percent, with the company working to diversify its clientele — from selling more furniture to colleges in southeast Georgia to dedicating a large section of the store to children’s school supplies.

“I do know that VIP will survive,” Finster said. “We’ll be here when it’s over. But sometimes this is the last straw for other small companies. It’s been a rough year.”